Realtors to open listings to online brokers

From Reuters:

The National Association of Realtors will open its vast listing of homes for
sale to cheaper, Internet-based brokers in an agreement to settle a federal
lawsuit, the government said in a statement on Tuesday.

The change could save those who buy or sell a home thousands of dollars since commissions could drop as much as 1 percent of the selling price, said Deborah Garza, the deputy assistant attorney general for antitrust, in a telephone briefing with reporters.

The settlement will lead to "more choice, better service and lower commission rates," Garza added.

Essentially the deal requires the 800 multiple listings services associated with the National Association of Realtors for various local markets to give access to Internet-based competitors, the government said.

This is a great thing for real estate investors who have been looking to use the MLS services to sell their homes, but have not wanted to pay a full real estate commission to do it.

We’ve seen it happen in other businesses: once the internet gets a toehold in a commissioned industry, prices for the consumer tend to plummet. Look at the rates consumers pay to book travel or buy and sell stocks; each has dropped dramatically as the internet has become a more popular way to book trips or invest.

More and more business is conducted online, and the first place most potential purchasers go to look for a new home is the internet. By opening up the MLS listings to online brokers, we can expect greater innovation which will just benefit the real estate investor. That is, by making the purchasing process cheaper and more simple for that potential buyer, investors stand to gain.

How long before we see realestate.google.com? You be the judge.

Photo: Computer city #1: Downtown, originally uploaded by Rune T.

Home prices continue sharp descent

From CNN:

Single-family home prices dropped 7.7% in the first quarter in the largest
year-over-year decline since the National Association of Realtors began
reporting prices in 1982.

The median sales price fell to $196,300, down 4.8% compared with the last three months of 2007.

Lawrence Yun, the chief economist of NAR, attributed much of the record decline to liquidity problems dragging down high-priced markets.

and:

Hurting home prices were big rises in foreclosure rates over the past 12 months,
which threaten to get even worse. Delinquencies more than doubled over that time
and more than 155,000 lost their homes in bank repossessions during the first
three months of the year.

All that foreclosure activity added to the glut of homes on the market. The total inventory has risen to an average of 10 months worth of unsold homes. In addition, a record number - 2.9 million - of vacant homes are up for sale, according to the Census Bureau.

The big inventory has led to aggressive price slashing and increased incentives by
builders looking to sell homes. They’ve also cut way back on housing starts,
which are at a 17-year low.

With the latest readings on home prices from the National Association of Realtors showing the largest year-to-year drop since the group began reporting prices, it is becoming clearer that the housing market is under increasing pressures.

As the group maintains: all real estate is local; but unfortunately, more and more local markets are facing increased downward pressure on prices: according to the NAR, 77 metropolitan statistical areas showed price declines in the last quarter of 2007. In the first quarter of 2008, that number increased 10 an even 100.

In the south, the median existing single-family home price was $164,200 in the first quarter, down 7.5 percent from a year earlier.

Blamed by the NAR for the most-recent record low were, once again, rising foreclosures and decreased availability of mortgage loans. As the number of foreclosures are expected to increase, and banks continue to curtail lending, there is every indication that home prices will continue to slide.

For real estate investors (and their closing attorneys) looking for a bottom, this is yet another sign that the troubles in the housing market will continue for some time to come. With falling prices, though, come opportunities never seen by investors before: there are more potential deals out there than ever, banks are desperate to get rid of REO properties, and more and more short sales are being approved every day. Investors who understand the overall market forces at play and turn them to their advantage are the ones best poised to succeed.

Photo: down, originally uploaded by nick3216.

Pending home sales hit another low

From CNN:

The number of homes under contract for sale fell in March, hitting a record low
for the second consecutive month, according to a report released Wednesday.

The National Association of Realtors' (NAR) Pending Home Sales Index
fell to 83 in March, down 1% from a downwardly revised reading of 83.8 in
February. The rate of decline was in line with a consensus estimate of
economists compiled by Briefing.com.

March's reading was down 20.1% from the same period last year and 35% from the index's peak in April 2005.

and from Bloomberg:

Fewer Americans signed contracts to buy previously owned homes in March for the
second consecutive month as falling prices and tougher loan rules discouraged
buyers.

The index of pending home resales fell 1 percent to 83,
following a 2.8 percent drop in February that was larger than previously
reported, the National Association of Realtors said today in Washington. The
decline matched the median forecast of economists surveyed by Bloomberg News.

The glut of unsold properties is driving down home values, while rising
defaults on subprime mortgages have prompted lenders to restrict access to
credit, representing more hurdles for buyers. The slump in residential real
estate may persist for much of the year, hurting economic growth.

Yet another record low in the pending-sales index .

With home prices falling, inventory surging, and credit and mortgage options limited, the downward trend in home sales seems to have reasserted itself after a brief uptick last fall.

These latest NAR numbers, which show a continuing decline in pending home sales as well as a downward revision from the last report, only serve to confirm what’s been said many times before: that we are still months away from a recovery in the real estate housing market.

The pending-sales index reports contracts signed, but not closed, and the value of the index lies in its forward-looking predictive ability to forecast existing home sales. Existing home sales represent the bulk of the market.

Real estate investors should take the lastest NAR figures as a sign that the downward pressure on prices will continue, and that a rebound in the short-term is highly unlikely. Still, tremendous opportunities abound on individual properties for the motivated investor willing to find them.

Photo: UP or DOWN / BLACK or WHITE, originally uploaded by Luichi74.

Existing home sales slip in March

From the National Association of Realtors:

Existing-home sales – including single-family, townhomes, condominiums and
co-ops – were down 2.0 percent to a seasonally adjusted annual rate (1) of 4.93
million units in March from a level of 5.03 million in February, and remain 19.3
percent below the 6.11 million-unit pace in March 2007. A rise in condo sales in
March was offset by a drop in single-family sales. Regionally, sales rose in the
Northeast and West but fell in the Midwest and South.

and:

The national median existing-home price (2) for all housing types was $200,700
in March, down 7.7 percent from a year ago when the median was $217,400. Because
the slowdown in sales from a year ago is greater in high-cost areas, there is a
downward pull to the national median with relatively higher sales activity in
low-cost markets.

and, more relevantly:

In the South, existing-home sales fell 3.5 percent to an annual rate of 1.92
million in March and are 20.0 percent below March 2007. The median price in the
South was $167,200, down 7.1 percent from a year ago.

Blamed by the NAR for the decline in home sales are restrictive lending practices which have prevented many potential purchasers from being able to buy a home. While lending practices and guidelines such as insisting upon relevant down payments, documentation of income, and higher minimum credit scores required for loan qualification may seem restrictive compared to the wild-west rules of the past few years, to many they represent a return to a more rational lending environment seen before the days of MBSs, CDOs, tranches and hedge funds. Regardless, the truth of the statement is evident, and it is the mortgage lenders, the loan programs they offer, and the limited number of buyers who can obtain financing which continue to drive sales numbers down.

The first question to any potential purchaser is whether they can get a mortgage.

Total housing inventory rose 1.0 percent at the end of March percent to 4.06
million existing homes available for sale, which represents a 9.9-month supply
at the current sales pace, up from a 9.6-month supply in February.

This is not a good thing. Again, this shows that we can probably expect continuing price depreciation for the foreseeable future. As homebuilders, existing home owners, bank REO departments, and other real estate investors fight for that limited pool of qualified buyers, they will compete on the only level they can: price.

As prices decline, lending practices become even more restrictive. As we’ve seen here in Atlanta, most of the lenders and mortgage insurance companies have declared the city a declining market – and the size of the loans they are willing to extend get chopped 5% off the top, meaning that a potential buyer has to bring that much more to the table to close.

It’s a vicious circle, and unfortunately, one that is likely to continue.

Photo: peal of laughter, originally uploaded by camillesau.

All-time Low for Pending Home Sales

The National Association of Realtor’s February index of pending home sales has fallen to an all-time low, falling 1.9% from January levels. The drop was nearly double what was expected by economists.

Overall, pending sales were down 21.4% from last year’s levels.

The index measures contracts signed, and not actual closings. It is therefore considered a forward-looking indicator of the overall housing market.





Photo: maybe, originally uploaded by Tal Bright.

NAR: Increase in Existing Home Sales

According to the National Association of Realtors, existing home sales rose unexpectedly in February, increasing 2.9 percent. It was the first increase in home sales in seven months.

Driving this increase were two factors: changes from January to February typically measure seasonal differences only, and the median sales price plummeted 8.2 percent from last year.

Home inventory remains high, with close to ten months of properties on the market.

As an Atlanta real estate lawyer, I have often counseled my clients not to read too much into the NAR’s statistics, or at least the NAR’s interpretation of their statistics.

But what conclusions can be drawn from their latest report?

First: housing is far from staging a recovery. While there was a modest increase in January to February sales, this is more likely attributable to seasonal factors, and not an actual improvement in the underlying market itself. In fact, sales of existing single-family homes were down 22.9 percent from a year ago. That’s a lot of houses.

Second: the drop in home prices as measured by the NAR has almost doubled from last month. January’s year-over-year prices fell 4.6 percent. February prices dropped 8.2 percent to $195,900.00.

It was recently reported that the majority of homeowners were in denial about home values, with three out of four believing that their home had gained or its retained value over the past year. The rapid decline in prices reported by the NAR may indicate that sellers are finally recognizing that homes aren’t worth what they used to be, and they are pricing more aggressively to compete with each other and the surging number of foreclosures.

These motivated sellers, who may be finally reducing prices drastically just to get homes sold, are your competition, and the successful investor is the one who is best able to turn market conditions to your favor.

Photo: down, originally uploaded by lomokev.

Pending Sales Flat, Foreclosures Soar

The monthly National Association of Realtor pending home sales numbers are out, and they’re unchanged from last month. The index remains at 85.9 for the month of January and is the same figure that the NAR reported for December. It’s also the second-lowest reading on record.

The NAR also updated its market forecast. The group, known for being overly-optimistic, is projecting a 1.2% decline in median home prices, with a 6.1% decline in home prices alone. A modest turnaround in the second half of the year, however, is predicted.

As a closing attorney who works with investors, I expect price deterioration to continue for the foreseeable future, and real estate investors should adjust their investment strategies accordingly.

In separate, but not unrelated news: the Mortgage Bankers Association is reporting that foreclosures hit an all-time high in the last quarter of 2007. According to the MBA, two percent of all mortgages are in foreclosure.

Photo: More not so functional arrows, originally uploaded by Yolande....

Home Sales and Prices Down, but…

The latest National Association of Realtors’ figures are out, and existing home sales have fallen for a sixth-straight month.

January sales dropped to 4.89 million nationwide, 0.4 percent less than last month. Year-over-year sales were down 23%.

Economists had predicted that existing home sales would fall to 4.80 million.

Median home prices as reported by the NAR dropped to $201,100. Last January the median was $210,900.

Additionally, the total of homes for sale rose 5.5% to 4.19 million. Which represents a 10.3-month inventory of homes on the market.

While this report shows the market declining at a slower pace than expected, investors should be fully aware of the nature of the NAR report before trying to call a bottom to the industry’s decline.

First, while it is true that the NAR statistics show a smaller drop in home sales than expected, a drop is still a drop. Additionally, the NAR only measures contracts signed, and not actual closings. One can expect that a number of contracts will not result in sales.

Additionally, an increase in overall home inventory will result in more downward pressure on home prices.

There has been recent (relatively) positive news in housing, and investors should watch the reports carefully, but I still think it’s way early to call a turnaround to this market. Once we see several months of declining inventory and stable new-home and existing-home sales, as well as less-restrictive credit markets, then we can start talking about reaching bottom.

The Word of the Year

According to the American Dialect Society, the 2007 word of the year? Subprime.

w00t!

And in other news: According to the National Association of Realtors, pending home sales have fallen 2.6% in November, well beyond the 0.8% decline predicted by economists.

The NAR does not now see a rebound in housing until 2009.

UPDATE: The head of Fannie Mae is now predicting that housing won't recover until 2010.